Let’s face it: Even if certain retailers try to ignore digitalization, one thing is for sure – their customers won’t.

Note: This article is part of our #DigitalRetail series – click here for an overview

The times are changing – and so is the way people shop

Digital transformation is profoundly changing the way people shop. They are increasingly moving across a multiplicity of channels to find products and expect a seamless and consistent shopping experience.

Just see how smartphones have impacted consumer shopping habits:

Omnichannel is nothing new at all, but has simply become the new shopping standard – people just use various channels which they expect to be perfectly connected. If not, frustration is inevitable.

So it is a seamless, easy, satisfying shopping experience that customers are looking for – across all channels. Not for the lowest price and not because they have gotten used to buying at a certain shop over the years.

In fact, a tragic example of customer loyalty reaching its limits is the recent downfall of a giant that once created so many delightful childhood memories: Toys R Us, the toy retailer, well-beloved by generations of kids, which collapsed into insolvency.

When talking about the table stakes when it comes to the future of retail, expert Tushar Patel says: “Toys R Us needed to think through the entire buying experience and reinvent their in-store experience and personalize their e-commerce. Innovation in retail is imperative, and unfortunately Toys R Us fell short”. Toys R Us had become “tired and irrelevant”, with an image and model that was stuck in the 1980s, he adds.

“Brands that are unable to create a comprehensive and integrated online / offline experience are going to struggle,” says Gitit Greenberg, SimilarWeb’s director of digital insights, with regard to the bankrupt Toys R Us.

So if even the collective emotional loyalty of 70 years of positive childhood memories couldn’t save Toys R Us – what does retail need to do in order to retain and win new customers?

The answer is simple: Adapt to customer needs that have changed considerably as a result of digitization – and enable the best possible Customer Experience.

What a great Customer Experience looks like – and how it is created

Admittedly, the implementation is a little more complex. So let’s start with an example of a good Customer Experience: Enjoy this short story of a girl named Linda who gets a date with her crush at short notice.

This short case demonstrates quite well how suddenly certain needs can emerge – be it just for those red shoes that go perfectly with that new dress – and how quickly consumers try to satisfy them.

Customer Touchpoints – What customers benefit from directly

Linda is a happy customer (let’s hope also her date with Jack works out just as perfectly J). So what makes her Customer Experience so positive?

Personalized Recommendations

The online shop she immediately recurred to is not only well-stocked, but it also “knew” what would meet Linda’s needs, by collecting and analyzing data from her last searches and purchases – this is how the shop was able to make her suitable proposals.

Click & Collect

Linda could not wait for two days but needed the shoes the same day. This is why she happily accepted the Click & Collect option, picking up the stilettos in a nearby-shop of her choice. This saves a lot of time and delivery costs not only for customers but also for retailers.

Loyalty Card

Let’s assume that, for her purchase, Linda also received loyalty points, redeemable for a discount or a little gift next time she buys at “Best Shoes”. For a perfect Customer Experience, it doesn’t matter if she payed online or in-store when she picked up the red shoes – or if she had a physical customer card or not. In any case, if she goes for the discount, it is up to her if she wants to redeem it online or in-store.

And beyond all these features that enabled a great customer experience for Linda, there are many more benefits for customers that Digital Retail enables.

For example, much better customer service – if her new shoes break, she can decide if she brings them back to the store of sends them back and receives a replacement for free. And no matter if she contacts the customer service via phone, via service chat or via Best Shoes’ social media, the service employee in charge exactly knows what product she bought last and what reimbursement options there are, including how long it takes for a substitute delivery.

And last but not least, Linda enjoys a frictionless payment experience – she can pay with the payment method of her choice online, on her smartphone and in-store. And maybe Best Shoes offers Connected Commerce in their branch, which means next time she shops there is no need for queuing at the counter, because Linda can just leave with the new pair of shoes she chose, because payment happens invisibly in the background. Or alternatively she just pays directly at the shelf with her smartphone.

#DigitalRetail: Either retailers use the opportunities of digitalization to make their business fit for the 21st century and offer their customers a better Customer Experience than ever before. Or they watch the customers churn and migrate to those retailers who manage to offer it.

Digital Retail Tools – making the magic happen in the background

Let’s now take a look behind the curtain, at the digital “machine room” that makes the great Customer Experience possible in the first place. It is based on a digital platform, a closed data cycle, fueled with nothing but customer data.

Single Customer Identification

In order to serve your shoppers in the best possible way, you must know who your customer is – and be able to “recognize” them, no matter if they visit your store, your online shop or call your service hotline. This may sound obvious, but there are still many retailers with separate profiles of the same customers, depending on whether they buy in-store, online or mobile.

Merged Warehouse and Integrated Stock Management System

Naturally, no matter how big a shop is, its stock is always limited. But thanks to the blessings of Digital Retail you can offer your customers a merged warehouse, also called “endless aisle”: If the shoe size Linda is looking for is not available at a certain branch, an integrated stock management system enables the shop assistant to tell her at which other branch she can pick them up.

Alternatively, Best Shoes can order them for her, with home or store delivery. Or when she looks online like in our film, the digital system directly navigates Linda to the closest shop, where her shoes are already waiting to be picked up.

Customer Relationship Management (CRM)

CRM has always been the centerpiece of customer care. But in digital times it is more powerful than ever before – thanks to the comprehensive and analyzed customer data. Not only does it organize your leads, it also allows you to analyze and predict your customers’ shopping behavior very well, for example by using Artificial Intelligence, see below.

Data Analytics

This is the place where big data is transformed into smart data, closely entwined with the CRM system. Long used in e-commerce, data analytics enables merchants to address customers very individually, making them near-perfect offers and reducing churn rates.

Conclusion

The digital revolution of the retail is in full swing – and it is here so stay.

Perhaps it is best understandable when you compare it with the huge upheavals caused by electrification 150 years ago: Anything that brings very concrete benefits, whether for customers or dealers, will inevitably prevail.

No matter how much mistrust, incomprehension and rejection existed at the time – today, there are no more people who do without electric light, and there are no specialist shops for petroleum lamps left.

This is also the case with the digital revolution in retail: Either retailers understand and use the opportunities of digitalization to make their business fit for the 21st century, and thus manage to offer their customers a better Customer Experience than ever before. Or they watch the customers churn and eventually migrate to those competitors who manage to offer it.

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Felix led the team working on business analytics solutions in Wirecard’s value-added services department. He was passionate about machine learning and advanced data science approaches that help propel the business of Wirecard’s customers and partners.